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Home › Dodgy Deals ›
Dodgy Deal
Kusile coal power plantSouth Africa

Project – On record

This profile is no longer actively maintained, with the information now possibly out of date
Contact:

climate@banktrack.org

Last update: 2018-08-08 17:24:22
Kusile power station, Witbank, South Africa. Photo: Bruce Paulmac via Wikimedia Commons (CC BY-SA 3.0)

Project – On record

This profile is no longer actively maintained, with the information now possibly out of date
Contact:

climate@banktrack.org

Last update: 2018-08-08 17:24:22
Why this profile?

Why this profile?

Coal is the number one driver of climate change, and construction of new coal-fired power plants anywhere is incompatible with combating climate change. In addition the project will have severe impacts on health and livelihoods. 

What must happen

The building of Kusile must stop immediately. Financial institutions should stop providing any finance to Eskom that may be used to build the Kusile power station. Banks should immediately call an end to financing new coal-fired power plants as an urgent climate protection measure. 

About
Sectors Coal Electric Power Generation
Location
Status
Planning
Design
Agreement
Construction
Operation
Closure
Decommission
Website http://www.eskom.co.za/Whatweredoing/NewBuild/Pages/Kusile_Power_Station.aspx

Located in the Nkangala district of Mpumalanga in South Africa, the Kusile Coal Power Plant is being developed by the state-owned utility Eskom. Consisting of six 900-megawatt units, the plant is expected to be the world's largest coal fired power plant when completed. Development continues despite several design defects. The first unit of the plant was connected to the national power grid in 2017, with the second unit following in 2018. The third unit is set to start operating in April 2021. If development and construction takes place according to the planned schedule, the plant is expected to be fully operational by 2024.

Impacts

Impact on human rights and communities

Kusile will be responsible for local population displacement and economic harm:

  • The plant will require the relocation of 27-43 families, around 300 people. With the aid of the Expropriation Act, Eskom can determine “appropriate” compensation value for the land required for the project. In a particularly cynical and Orwellian fashion the EIA suggests leasing back expropriated land to displaced farmers as a “mitigation measure” to reduce economic impact associated with the project.
  • Less than 50% of the economic benefits of this project will be accrued to South Africa as more than half of project financing will be spent on imported equipment and the hiring of foreign specialists. Currently, the poor in South Africa consume less than 5% of grid connected power, in contrast to the 38 largest corporations that consume 40%. In reality, the poor are paying far more per kilowatt for their electricity than export-oriented metals and mining industries that overwhelmingly benefit from these projects while repatriating the vast bulk of their profits abroad.
  • Energy prices were expected to go up by 12.7% for the year 2015-2016. However Eskom is planning a new application to increase this tariff to 25.3% as of July. It has asked for the tariff hike to keep the open-cycle gas turbines running and reduce load-shedding. Eskom has had to sell several non-core assets to increase their capital. It has a shortfall of ZAR250 billion and its energy grid has an operational reserve capacity of 1.3%. The energy rise will have an extensive impact on their customers and the rolling black-outs are likely to continue regardless. 

Impact on climate

Kusile will significantly contribute to climate change: The annual green house gas equivalent emissions for this single project, 36.8 million tonnes, would increase South African energy sector emissions by 12.8% and the country’s total contribution to climate change by 9.7%. This despite the fact that South Africa already has the distinction of being amongst the top global greenhouse gas emitters per capita. Its energy sector is twenty times more CO2 intensive per capita GDP than even the USA’s. Despite the immensity of its climate impacts, the EIA dedicated less than one page of a 174 page document to the subject with no mitigation measures proposed.


Impact on nature and environment

Kusile will also lead to high pollution and health impacts:

  • Sulphur dioxide – According to the US Environmental Protection Agency, SO2 contributes to serious cardiovascular and respiratory illnesses such as asthma and heart disease and can cause premature death. The project EIA demonstrates that the current ambient background sulphur levels already far exceed permitted levels. The project therefore will only serve to add to these dangerously high levels rendering the area unable to comply with internationally recognized limits for toxic sulphur emissions.
  • “The exceedances [of existing sources] were six times above hourly SO2 limits, for more than 200 hours per year; and 20 to 30 days per year, making it challenging for cumulative concentrations to be within limits regardless of the site selected, the stack height or the SO2 control efficiency implemented… even for the best case scenario, exceedances still increased by some 30% above the future base case scenario…Impacts on human health as a result of the additional emissions of SO2 are therefore deemed to have a high significance.”
  • Toxic fly ash – Fly ash from coal burning contains heavy metals and other toxics such as arsenic, uranium and mercury, which can cause cancer and neurological and developmental disorders. Approximately 1,000 hectare of land would be required to accommodate a toxic above ground fly ash dump for the life of the coal fired power station i.e. 40 – 50 years. This dump “could have direct and indirect impacts on the aquatic environment…The impact would have a high magnitude and long term duration…accordingly a high significance impact is anticipated.”
  • Nitrogen oxides – NOx can mix with other compounds to produce volatile substances and causes or worsens respiratory and cardiovascular illnesses such as emphysema, bronchitis, and heart disease, increasing hospital emissions and premature death. Despite the fact that this is a major pollutant produced from burning coal, the project completely avoids addressing specific mitigation measures for NOx pollution saying they are “…not considered in any further detail.”
  • Contaminated water supplies - The plant will require a supply of 17 metric tonnes of coal per year, which will stimulate demand for new environmentally harmful mines. This in turn will have an adverse impact on water quality and peoples’ health. Much of South Africa's coal is surface-mined poor quality coal, with high ash and sulphur content, which will require washing before being burned in the plant, thus adding burden on scarce water supply as well as causing more pollution.
Financiers
Institution type
Finance type
Year
Companies

Alstom

France
Website
Was responsible for the control and instrumentation works at Kusile power station. Consensual termination has been reached on a co-operative walk-away basis in March 2015.

Eskom

South Africa
Profile

Siemens

Germany
Control and instrumentation works for the Kusile power station.
No companies
News
BankTrack
Partners
Blog
External
BankTrack news BankTrack blog Partner news Partner blog

Terms of Eskom’s China loan private, says Cyril Ramaphosa

2018-09-12 | Business Day
BankTrack news BankTrack blog Partner news Partner blog

Greenpeace responds to China’s $2.5bn loan for Kusile power station

2018-07-26 | ESI Africa
BankTrack news BankTrack blog Partner news Partner blog

Eskom: Kusile and Medupi projects should be put on ice

2017-11-19 | PoliticsWeb
BankTrack news BankTrack blog Partner news Partner blog

Externality costs of the coal-fuel cycle: The case of Kusile Power Station

2017-09-28 | South African Journal of Science
BankTrack news BankTrack blog Partner news Partner blog

Madonsela incorporates Hitachi deal into Medupi probe

2015-10-02 | Eyewitness News
BankTrack news BankTrack blog Partner news Partner blog

Eskom a water guzzler, study finds

2015-06-29 | www.iol.co.za
BankTrack news BankTrack blog Partner news Partner blog

Request for Eskom tariff increase of more than 25%

2015-03-20 | Business Day Live
Blog
BankTrack news BankTrack blog Partner news Partner blog

BNP Paribas results disastrous for climate and taxation, say campaigners at today’s AGM

2014-05-15 | Paris | Les Amis de la Terre
BankTrack news BankTrack blog Partner news Partner blog

Medupi, Kusile contractors and unions reach agreement

2013-06-12 | MoneyWeb
BankTrack news BankTrack blog Partner news Partner blog

Eskom: A company in distress

2013-03-04 | Daily Maverick
BankTrack news BankTrack blog Partner news Partner blog

High energy users deny subsidies

2013-01-21 | Business Day Live
BankTrack news BankTrack blog Partner news Partner blog

Nersa’s public hearings continue

2013-01-21 | Business Report
BankTrack news BankTrack blog Partner news Partner blog

Investing in water-less green solutions imperative

2012-10-17 | Business Day Live
BankTrack news BankTrack blog Partner news Partner blog

Hike 'doesn't help Eskom'

2011-08-15 | South Africa | IAfrica
BankTrack news BankTrack blog Partner news Partner blog

Barclays, HSBC and RBS linked to 'dirty financing' for fossil fuels

2011-06-14 | The Ecologist
BankTrack news BankTrack blog Partner news Partner blog

Eskom resumes Medupi construction after protests

2011-05-23 | South Africa | Reuters
BankTrack news BankTrack blog Partner news Partner blog

US bank set to approve Eskom loan for Kusile

2011-04-18 | BusinessDay
BankTrack news BankTrack blog Partner news Partner blog

US Ex-Im Bank finances huge coal plant in South Africa

2011-04-15 | Sustainable Business
BankTrack news BankTrack blog Partner news Partner blog

Medupi to go on line in third quarter of 2012

2011-04-11 | South Africa | Engineering News
BankTrack news BankTrack blog Partner news Partner blog

GE Technology Purifies Water at One of World's Largest Coal Power Plants

2011-04-01 | eponline.com
Blog
BankTrack news BankTrack blog Partner news Partner blog

U.S. Taxpayer-Funded Bank Should Follow the Doctor's Orders on Coal in South Africa

2011-03-18 | United States | Michelle Chan, Economic policy director, Friends of the Earth US
BankTrack news BankTrack blog Partner news Partner blog

Energy, viability of Kusile and Medupi

2011-02-28 | The Project Manager
BankTrack news BankTrack blog Partner news Partner blog

Eskom hires banks for dollar bond sale to boost South Africa electricity

2011-02-01 | South Africa | Bloomberg
BankTrack news BankTrack blog Partner news Partner blog

Dethroning King Coal in 2011 - From West Virginia to Durban

2011-01-20 | allAfrica.com
BankTrack news BankTrack blog Partner news Partner blog

US Ex-Im Bank urged to deny funding to Kusile power project

2011-01-19 | Engineering News
BankTrack news BankTrack blog Partner news Partner blog

Eskom: It wasn't just lunch

2010-12-07 | Times Live
Resources
Documents
Videos
Links
2015-10-31 00:00:00

Coal:French banks are not doing the math

NGO document
2015-10-31 00:00:00 | Les Amis de la Terre, Oxfam France
2015-05-13 00:00:00

BNP Paribas Coal Bank Briefing 2015

English version
BankTrack publication
2015-05-13 00:00:00 | BankTrack, Les Amis de la Terre
2015-05-04 00:00:00

The end of coal?

2015 Coal Finance Report Card
BankTrack publication
2015-05-04 00:00:00 | BankTrack, Rainforest Action Network, Sierra Club
2015-03-31 00:00:00

Long term forecasts of water usage for electricity generation: South Africa 2030

Report to the water commission by the University of Pretoria
Other document
2015-03-31 00:00:00 | A. Pouris, G.A. Thopil
2011-09-29 00:00:00

The external cost of coal-fired power generation

The case of Kusile
NGO document
2011-09-29 00:00:00 | Greenpeace
2011-03-11 00:00:00

Fossilized Thinking: The World Bank, Eskom, and the real cost of coal

NGO document
2011-03-11 00:00:00 | COEIL
2011-01-15 00:00:00

Kusile Power Project Factsheet

NGO document
2011-01-15 00:00:00 | Sierra Club
2010-09-20 00:00:00

NGOs warning letter to Ex-Im Bank on Kusile

NGO document
2010-09-20 00:00:00 | groundWork and many other NGOs
2010-09-03 00:00:00

Critique letter of Kusile Environmental Impact Report

NGO document
2010-09-03 00:00:00 | Pacific Environment, groundWork and Sierra Club
2007-02-01 00:00:00

Kusile Environmental Impact Assessment

Company document
2007-02-01 00:00:00 | Eskom

Eskom mulls foreign investor conditions for Kusile transaction following road shows

The Asian, European and American investors canvassed during a recent week-long Eskom road show about the prospect of taking an equity position in the ZAR141.5 billion Kusile power project expressed "excitement", but also set down several provisos for any such transaction.
2011-02-10 01:06:24

Eskom to sell up to 30% of Kusile in bid to secure up to ZAR40 billion in private equity

South Africa's State-owned power utility Eskom would issue a request for proposals within weeks of its final December board meeting for an adviser to support it in securing up to ZAR40 billion in project equity finance for its ZAR142 billion Kusile coal-fired project.
2011-02-10 01:05:37

WWF calls on Eskom to defer Kusile project

The World Wide Fund for Nature (WWF) South Africa called on the government and Eskom to reconsider plans to complete the construction of the Kusile power station in Mpumalanga, as the new coal-fired plant would add significantly to the country's carbon emissions.
2011-02-10 01:03:27

Source Watch on Kusile

Flickr - Ex-Im Vote

Pictures from the action against US Ex-Im vote on Kusile on January 13, 2011, in Washington DC.

FoE US - A day’s journey through South African coal country

Blog post about a visit to see the construction area of the Kusile power plant.

Foe US - Stop US Financing for Massive Coal Plant in South Africa

Friends of the Earth fights back against proposal to use U.S. tax dollars to fund dirty coal in South Africa.

Huffington Post - Will U.S. Taxpayers Be Asked to Finance Environmental Devastation in South Africa?

Blog from Michelle Chan, from Friends of the Earth US, in The Huffington Post.
Updates

2017

2017-01-31 00:00:00 | Kusile expected to be operational second half of 2017

Eskom has indicated that the first synchronisation of Kusile Unit 1 is now scheduled for the first half of 2017, with the 800 MW unit expected to enter commercial operations in the second half of 2017.

2016

2016-02-05 00:00:00 | Control and Instrumentation near completion

This completion of control and instrumentation is an indicator in terms of how far the project stands. It is expected that, by the first half of 2018, Unit 1 will be online (source www.fin24.com).

2015

2015-11-06 00:00:00 | Eskom expects no load shedding before April 2016

According to enerdata.net: South Africa's national power utility Eskom does not anticipate any load shedding before late April 2016. The company has just reached 50 days without any load shedding despite significant maintenance projects being undertaken over the past two months.

2015-03-03 00:00:00 | Medupi power plant starts delivery

Medupi, the power plant identical constructed as to Kusile, has started delivery to the South African electricity grid. This after a delay of four years and at nearly double the initial budgeted project costs.

2015-01-15 00:00:00 | Eskom confirms Kusile Unit 1 sync slips to first half 2017

Embattled power utility Eskom, which has been experiencing major delays and cost overruns at its two coal-fired megaprojects Medupi and Kusile, gave an assurance that the synchronisation of Medupi Unit 6 is only weeks away, with pipe restoration work between the boiler and the turbine currently under way (source: www.miningweekly.com).

2013

2013-07-01 00:00:00 | Bond Issuance

In July 2013 Eskom Holdings issued new 10-year bonds with a total value of USD 1 billion. The proceeds of the issuance were used for general corporate purposes. Both Barclays and Citi assisted with the issuance of these bonds, underwriting them for USD500 million each. It is assumed that half of the bond issuance was devoted to the Kusile power plant and the other half to Medupi.

2011

2011-08-18 00:00:00 | Developments in 2011

The Kusile power plant is threatened due to a 25 percent rise in electricity tariffs. It has been said that at 33c/kWh, Eskom is not covering its operating costs. Eskom also has raising costs in their capital expenditure programme. The forecasts of the programme have risen from ZAR84 billion in 2005 to ZAR385 billion. In order to deal with the financial issues faced by Eskom, some solutions have been given such as a loan levy, a review of Nersa's tariff decision, extra equity investment by the government and increasing government guarantees for Eskom debt. After weeks of protests at both Medupi and Kusile power plants, the Medupi power plant resumed operation on May 23, 2011. Kusile is only partially resumed while talks continue to end the protests. The protests began when foreigners were hired as welders while other local contacts were being ended. To read more about the protests go here.

On April 14, 2011 the Board of Directors of the U.S. Export-Import Bank (Ex-Im Bank) voted to approve USD805 million in subsidized financing for the project.

Eskom said it had signed loans totalling EUR705 million (USD917.5 million) from German and Japanese banks as well as obtaining some funds from South African banks. The loans are repayable over 12 years, starting six months after units of the plant are commissioned, it added. The utility is now looking for more financing to complete the Kusile plant, but it is not mentioned how much was needed.

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